Independence Blue Cross has agreed to pay $22.5 million to resolve allegations that it violated the civil False Claims Act, in a case tied to how the Philadelphia-based insurer handled diagnosis codes for its Medicare Advantage enrollees. The settlement closes out a lawsuit originally brought by one of the company's own employees.
According to the Justice News, Independence Blue Cross is an insurance company incorporated under Pennsylvania law, and it stood accused of submitting or failing to withdraw inaccurate and untruthful diagnosis codes for Medicare Advantage plan enrollees. The allegations further claimed the insurer improperly retained overpayments it received from Medicare as a result. As reported by the U.S. Attorney's Office for the Eastern District of Pennsylvania, the $22,500,000 settlement resolves claims that the company violated the civil False Claims Act by submitting or failing to correct those inaccurate diagnoses.
A Whistleblower Inside the Company
The case traces back to a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act by an employee of Independence Blue Cross in the U.S. District Court for the Eastern District of Pennsylvania. Per oversight.gov, those provisions allow private citizens to bring lawsuits on behalf of the government when they believe a company has defrauded federal programs. The whistleblower is identified as Crawford, while the suit's filing date remains undisclosed; the former employee will receive $3,825,000.
Part of a Broader Federal Crackdown
Independence Blue Cross is far from the only insurer to face this kind of scrutiny. Aetna, also incorporated under Pennsylvania law, agreed to pay $117.7 million to resolve similar allegations that it submitted or failed to withdraw inaccurate and untruthful diagnosis codes for its own Medicare Advantage enrollees, the Justice Department said. Affiliates of Kaiser Permanente, the Oakland-based healthcare consortium, agreed to a far larger $556 million settlement over comparable False Claims Act allegations, while Tennessee-based Medicare Advantage provider Monogram Health settled its own False Claims Act suit for $2.4 million.
Federal watchdogs have flagged unsupported Medicare Advantage diagnosis coding as a persistent problem well beyond any single insurer. A January review by the Office of Inspector General for the U.S. Department of Health and Human Services found that in 202 of 240 sampled Humana enrollee-years, diagnosis codes submitted to CMS were not supported by medical records, resulting in $497,225 in overpayments. That finding involved Humana, not Independence Blue Cross, but it illustrates the kind of documentation gaps regulators have been chasing across the industry.
Stroke Codes and a Half-Billion-Dollar Estimate
The same inspector general's office estimated separately that CMS made $462 million in potential net overpayments to Medicare Advantage organizations nationwide for 2021 based on certain unsupported acute-stroke diagnosis codes, according to its own reporting. The office has also published a toolkit aimed at helping identify high-risk diagnosis codes as a way to curb improper payments across the Medicare Advantage system, underscoring that the scrutiny facing Independence Blue Cross fits into a much larger federal effort to tighten oversight of how insurers bill for risk-adjusted diagnoses.
